Hiring An Auction Company

Estimating your assets value:

Typically, one of the first questions a business owner will ask me is, “how much will the assets bring at an auction”. After taking the time to review the assets, the auctioneer should give the client a conservative estimate of the sale based upon his experience and the current market trends. It is important that the company give realistic expectations so the seller can make informed decisions based on their best interest.

Compensation and Expenses:

Is the company you are considering working for you or against you? The agreement you decide may determine this.

A business owner should carefully consider how the auction company is compensated. The most common commission structures include: straight commission, outright purchase of assets, guaranteed base with a split above to both auctioneer and seller, guaranteed base with anything above going to auctioneer or a flat fee structure.

In a straight commission structure, the company is paid an agreed upon percentage of the total sale.

In an outright purchase agreement, the auctioneer simply becomes your end buyer. The company purchases your assets and relocates them. While this can be an option in some unique situations, keep in mind that they will want to purchase your assets at a very reduced price to make a profit at a later date.

In a minimum base guarantee, the auction company guarantees the seller that the auction will generate a minimum amount of sales. Anything above that amount either goes to the auction company or split with the seller. While a seller might feel more comfortable doing an auction knowing that he is guaranteed a minimum amount for his sale, keep in mind that it is the best interest of the auction company to secure a minimum base price as low as possible in order reduce their financial liability to the seller and secure higher compensation for the sale.

In a flat fee structure, the auctioneer agrees to show up for the sale and call the auction. There is no incentive for the auctioneer to get the best prices for your assets. The auction company is compensated regardless of the outcome of your sale.

What is the best option for business owners? In my experience, an agreed upon straight commission structure. This puts the responsibility on the auction company to offer the best outcome for everyone involved. There is an incentive for the auction company to work hard for both parties, set up and run a professional sale, get the highest bid and sell every item on the inventory. Successful auctions translate to a higher bottom line for both the seller and the auction company.

Auction Expenses:

In most auction agreements the expenses to conduct an auction are passed to the seller. If the auction company pays for the expenses, it is simply absorbed in higher commission rates.

All expenses should be agreed upon in advance in a written contract. Typical expenses will include the costs of advertising, labor, legal fees, travel, equipment rentals, security, postage and printing. A reputable auction company will be able to estimate all expenses based upon their experience in previous auctions. An agreement should be actual costs charged as expenses, not an estimated amount.

Advertising is typically the highest cost in conducting an auction. The auction company needs to set up an advertising campaign that will promote the sale to its best advantage and not overspend to simply advertise the auction company.

Once the auction is complete, the auction company should provide a complete breakdown of all expenses to the seller, including copies of receipts within the auction summary report.

Buyer’s Premium:

What is a buyer’s premium? If you attend auctions regularly, you are very familiar with this term. The auction company charges a fee to the buyer when they buy an item at auction.

The buyer’s premium has been around since the 1980′s and is standard auction practice. It was first used by auction houses to help offset costs of running brick and mortar permanent auction facilities. Since then, it has spread to all aspects of the auction industry. It is prominent in online auctions and allows auction companies to cover added expenses incurred from online sales.

It is the responsibility of the auction company to provide clear disclosure of the buyer’s premium to both the buyers and the sellers. Those not familiar with auctions are often taken back by the buyer’s premium. They looked upon it as an under handed way for the auction company to make more money. Reputable auction companies will provide full disclosure within the auction contract, advertisement and bidder registration.

Typically, an auction company will charge online buyers a higher buyer’s premium percentage than those attending an auction in person. Extra fees are incurred with online bidding and are charged accordingly to online buyers. This provides the seller a level playing field for both online buyers and those attending the auction in person. Without the buyer’s premium, there is no way to do this.

Pre-Sales:

We’ve all been there. We’re looking forward to attending an auction only to find that some items were sold prior to the auction date.

As an auctioneer with over thirty-six years of experience, I can honestly state that pre-sales will hurt an auction. When a company decides to liquidate their assets, it is easy to sell off high-end pieces of equipment through online sources, equipment vendors or to other businesses. The seller receives instant cash and avoids paying a commission to an auction company.

Auctioneer’s find themselves appearing to acting in a self-serving capacity when potential clients say they are planning to sell off parts of their inventory prior to an auction. It’s hard not to consider the auctioneer’s commission when they warn you not to pre-sell anything. Yes, the auctioneer wants to earn a commission on those sales but it is more important that the auctioneer protect the sale from potential negative backlash that comes from pre-selling. The buying public knows when an auction has been “cherry picked” prior to the sale and it reflects in their bidding. It becomes a sale of “leftovers” and that impacts prices.

A buyer who purchases prior to the auction usually does not attend the sale. They already bought equipment at a good price with no competition. If they do attend the auction, they tend to let others know of their great pre-sale purchases which again, impacts prices and the overall excitement of the sale.

It is important to understand that auctions work best with a complete inventory. You want competition on your higher end equipment. The easy to sell items make it possible to gain respectable prices for hard to sell items.

When a business owner decides to liquidate their equipment assets, there is only one opportunity to do it right. Hiring a reputable auction company will assist you with a professional, orderly and timely liquidation.

A Small Business Phone System Puts Small Companies in the Big League

A small business phone system can help a small business to operate more efficiently as well as minimize communication costs. Unfortunately, most phone systems are given little consideration when a business is first starting out. Communication with business clients and customers is essential to any successful business and should be given careful consideration before the final decision is made.There are many different options available to the business owner when looking at a small business telephone system. Most of the time, basic features are needed to conduct business on a day-to-day basis. Things such as call holding, call forwarding, music on hold, and voice mail are all basic features that most businesses use during the course of communicating with customers or clients. For this reason it is important that any system being considered has these options available.Since communication is the core of any business, considerations must be made for how the business operates and which features would be considered most important. As an example, if the business is involved in the delivery of physical products then having a way to communicate with drivers and dispatch deliveries would be important. A small business phone system in this particular case would need to include features that allow the dispatcher to communicate with the drivers as well as sales personnel and other employees scheduling deliveries. This type of system might include a feature that allows extensions to be forwarded to cellular phones so that drivers can be reached simply by calling their extensions.The above scenario is just one of many ways in which having a properly configured small business system can streamline productivity and save the company money. Larger businesses have enjoyed this advanced technology for some time and now many manufacturers are now making these features available to smaller businesses. Technology such as voice over IP and automatic call distribution are now being integrated into small business phone systems.One benefit to small businesses is having an auto attendant to route calls. With this technology in place, there is no need to have someone answering the phone simply to transfer the call to another person. The phone system can route these calls based on the last name of the person they’re trying to reach or entering the extension directly if they happen to know it. If the business does not have an operator, there are ways that the system can be set up to route calls should the caller press zero.Voice over IP technology has become the norm in telecommunications solutions. This technology allows businesses large and small to leverage their existing network for the transmission of voice communication. Phones for small business are now using this technology to allow them to have communication without boundaries. Like their larger counterparts, small businesses are taking advantage of the versatility that voice over IP provides. No longer limited to the office, employees can take their extensions with them so no matter where they’re at, they can conduct business seamlessly. Another advantage to employee mobility is that customers and clients are given one phone number. Giving a client or customer a cell phone number often results in an employee always being available whether actually at work or not. By giving a client an extension on the phone system, they will only be able to reach the employee during normal business hours. The phone system provides a voice mail where the client or customer can leave a message. During times when the employee is at work, the extension can then be forwarded to the cell phone so that the employee can be reached if he or she is out of the office.A large consideration when choosing a small business telephone system is one of supportability. Many smaller businesses do not have internal IT support. For this reason, when purchasing the phone system support should be included in the contract price. However, if the business does have internal IT support they will need to be trained on how to add extensions and provide other basic maintenance that the business needs on a day-to-day basis.Toll fraud can cost a small business lots of money before they realize that it has occurred. Security is of the utmost importance when implementing a small business phone system. Toll fraud occurs when unauthorized calls are made using the phone system and the phone lines attached to it. These calls are often made to overseas locations at the expense of the business. They often don’t realize it until they receive the bill and question the nature of the calls. Most of the time in these cases, the phone company will rarely reversed the charges. This is why it is important that the phone system be set up to minimize this risk. Additionally, a phone system should have the ability to block calls to specific parts of the world or to limit employees to making only local calls if needed.The type of circuit used for phones for small companies is typically what is called a POTS line. POTS, an acronym for “plain old telephone system” is a single phone line identical to what you would see in a typical home setting. The limitation of the POTS line is that it can only handle one phone call at a time. In order for a business to receive more than one call at a time the phone company must bring in multiple POTS lines. They’re then configured in the small business telephone system as a “trunk group”. The phone system then distributes the calls to individual extensions. Due to limitations of standard phone lines, many small businesses are taking advantage of the newer technologies such as voice over IP. Since data circuits can be used for more than just voice traffic, it’s become quite appealing to even the small business owner.A business system is becoming a necessity for many small businesses. In order to compete with larger businesses, the smaller companies must appear bigger than they are. Since many consumers will often go with well-known names, smaller businesses are going to have to work harder to establish Customer confidence. When a customer calls and the call is answered in a professional manner, the customer is more confident about the potential transaction. Having a small business telephone system puts a smaller company on the same playing field as its larger competitors.

Having a Home Based Business and a Happy Habitat

Okay so, how did I come to write this article on Home Based Businesses you might wonder? Well, you see, it’s always been on my mind, I love small businesses, in fact, I started my first business at age 12 washing aircraft, and when I got my driver’s license I put equipment in the back of my truck to wash car. Eventually, I had so much business I hired friends calling them “independent contractors” to help do all the work, later, I franchised that business in some 23 states serving 450 cities.

Each one of those franchises was a home-based business, well all but a handful which grew too large. That’s right all operating out of their home offices, doing services, and now you can see why I love home businesses. Needless to say, I’ve learned a lot about running a home based business, much of it the hard way, and thus, I thought I’d put some of my ideas, thoughts, observations, experiences, and wisdom here with you today.

No, running a small business isn’t easy, but I hope you’ll consider it and perhaps have a smoother road than I – oh, no, I am not complaining – I wouldn’t change anything or trade it, that adversity built character too – I have plenty – would you like to buy some? Yes, if you take the plunge into a small business you too will have to battle the tough times, especially in the beginning, but the freedom is much better than corporate life, I bet you’ll be happier making your own way in the world.

So, you are probably wonder for whom I wrote this article? Well, how about consultants, like the SCORE volunteer who told me my business wouldn’t work, and, for all the future small business people considering a career being their own boss? How about for government regulators at all levels who often don’t seem to have a clue about home-based small businesses?

Also, the college business professors teaching MBA classes, in fact, anyone who buys from a small business to help keep the money flowing in the community, anybody who works in a small company, sells goods or services to small firms, or corporate buyers who buy from them – yes, that’s just about everyone.

You see, I’d like the world to know that being self-employed is excellent, and it’s a great way of life, and although it is a bumpier road perhaps at times, it’s more rewarding in the end to build something. So, please consider all this and think on it.


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